Is Someone Following You Around the Store as You Shop?

Well, they might be – if you are one of the 58 percent of adult Americans who own a smartphone. Each smartphone broadcasts a unique identifying code through signals emitted as the phone searches for available networks. Retailers can track these signals and follow the in-store movements of customers as they shop.

Most consumers understand that online stores track shoppers as they navigate around their websites. Yet, few realize some brick-and-mortar retail stores and shopping malls are using smartphone mobile analytics to do the same. This lack of consumer awareness raises important privacy concerns.

In-Store Tracking Is Unpopular With Consumers

Research indicates consumers are strongly against the idea of in-store tracking. In a recent survey, 77 percent of consumers said it was unacceptable for retailers to track the movements of shoppers through their smartphones. The survey notes 44 percent of consumers indicated they would be less likely to shop at retailers engaging in this type of tracking.

In another survey, consumers identified their biggest concern about in-store tracking as being the security and privacy of mobile location data collected. This concern was highest among consumers ages 50 and older.

Lack of Transparency and Control Are Key Issues

Currently, it is difficult for consumers to know if a retailer is tracking in-store movements via smartphones. Consumers often have no way of knowing the types of data stores are collecting, the purpose of the data collection, and if stores will use the data to create detailed profiles about customers.

Unlike online stores that provide privacy policies on their websites, brick-and-mortar retail stores typically do not post privacy policies at store entrances. This means consumers are unable to make informed choices about the privacy of their in-store movements. Consumers can prevent data collection by shutting off their phones’ Wi-Fi and Bluetooth before they enter a store.

Addressing Privacy Concerns

Some policymakers are expressing concerns about the privacy implications of in-store tracking. Sen. Charles Schumer (D-N.Y.) is urging the Federal Trade Commission to investigate in-store tracking and provide consumers with an opt-out mechanism. Proposed legislation would require stores to notify customers about mobile device tracking before they enter a store.

The Code of Conduct requires retail stores to post conspicuous signage notifying consumers about mobile tracking. Notably, the code establishes a central website where consumers can register mobile devices and opt out of in-store data collection.

However, the voluntary code will not limit in-store data collection by companies that choose not to follow it. While 11 companies have committed to following the Code of Conduct, estimates suggest there are up to 40 companies currently engaging in mobile location data analytics.

The lack of mandated privacy protections means consumers continue to be at risk of having their in-store movements tracked without their knowledge.

Neal Walters is a policy research senior analyst for the Consumer and State Affairs Team who publishes on topics including financial information privacy, identity theft, affordable home utilities, prepaid cards, credit reporting and the subprime mortgage market.